On February 8, 2017, the New York State Teachers Retirement System made a bold financial decision to lower its position in one of the biggest names in transportation – CSX Co. (NASDAQ:CSX). According to its most recent Form 13F filing with the Securities and Exchange Commission (SEC), the institutional investor sold 77,215 shares during the fourth quarter, bringing its total down to 2,298,370 shares. This decrease in holdings marked a considerable drop of 3.3% for CSX’s share value.
The New York State Teachers Retirement System owned approximately 0.11% of CSX worth $71,204,000 at the end of the year’s final quarter. It was unclear why such a significant sell-off occurred at the time, but what was notable is that it transpired after CSX issued strong and positive third-quarter results. In fact, pre-market trading had been up as much as 1% on January 25th when earnings were announced.
Investors may have been surprised by this sudden shift in attitude towards CSX since it had posted impressive earnings for Q4 back then. The transportation company reported $0.49 EPS for that quarter, which was slightly above analysts’ consensus estimates of $0.47 per share – thus cheering stockholders everywhere. Meanwhile, investors familiar with CSX and its core operations knew that this wasn’t just any ordinary rail-based freight transportation service: aside from traditional railway services, they carry out intermodal container and trailer transports plus bulk commodity operations.
Despite challenges due to COVID-19 implications on overall production and supply chains worldwide throughout the previous year – which saw companies hurt left, right and center – , CNBC reports show that for the full fiscal year ended December 31st last year revenues came in at $11.93 billion vs $11.93 billion expected., confirming that for all intents and purposes things seemed to be looking up for CSX.
But then, CBS News reported in March that continued frustration with CSX’s operations created additional controversy. Delays in the delivery of goods, insufficient customer service and what critics considered to be repeated mismanagement by senior officials were cited as major pain points. Despite this being challenging news for management, they remained optimistic about future prospects due to several planned upgrades within their rail network designed to improve freight delivery across several Southern states.
In conclusion, while investors may have initially reacted negatively to news of New York State Teachers Retirement System’s reduced stake in CSX at the end of last year, it is necessary to remember that a company’s success or failure rests on more than just shares alone. As evidenced by CSX’s recent challenges and subsequent realignments aimed towards repositioning itself as a leading transportation provider – determined to deliver better speed efficiencies including intermodal services offered through its rail-to-truck transfers – there might well still be room for improvement here. Nonetheless with significant investments already made into the company’s infrastructure systems expected to enhance its financial performance long term , people all over can wait eagerly while hopeful for positive results going forward.
Hedge Funds Increase Activity with CSX Corp as Institutional Investors Rise to Hold over 72% of Stock
CSX Corp. is a freight transportation service provider which specializes in rail-based services. Recently, various hedge funds have been buying and selling CSX shares, such as Arrowstreet Capital Limited Partnership who boosted their stake by 395.9%, resulting in them now owning around $195 million worth of the transportation company’s stock. This increase was due to acquiring an additional 4,158,204 shares in the last quarter.
Furthermore, there are several other funds that sold and bought accordingly; First Trust Advisors LP grew its holdings by over 3 million shares, Point72 Asset Management L.P. raised their position by 183% and Cottage Street Advisors LLC’s stake was lifted by almost 2.9 million shares.
Making waves earlier this year was Ceredex Value Advisors LLC who acquired a new position in CSX where it then had a value of $45,637,000.
The increase of hedge fund activity has seen institutional investors rising to hold over 72% of the transportation company’s stock globally with a market capitalization of $61.58 billion.
Shares for CSX opened at $30.02 this week with a quick ratio of 1.42 and current ratio of 1.56 making the debt-to-equity ratio at 1.42 according to analytical assessments from finance professionals.
Looking back into history, CSX Co was founded way back in 1827 and is located at the headquarters in Jacksonville-FL where it handles intermodal containers, trailers transportations along with bulk commodity operations solely resting on surface transportation.
Recent disclosure showed that investors were paid out an annualized dividend of $0.44 with a yield return of around 1.47% resulting from payout ratios reaching as high as around ~22%. The dividend holders for CSX must have bought-in prior to February (27th) this year to qualify openly for dividends paid on March (15th).
Overall analysts based in multiple research institutions suggest that CSX would be a safe bet for future investors with the likes of Morgan Stanley upgrading their rating from “underweight” level to “equal weight”. Benchmark decreased its target price on CSX but still maintained a “buy” rating whilst Cowen raised their price objective slightly from $33.00 to $35.00, giving CSX Stock a “market perform” rating.
